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Gold’s relentless climb hits imports

GOLD imports have declined significantly even as international prices hit a record high of $967.7 per ounce on the Comex on Wednesday. Traders expect scrap sales to increase to stem rising prices. Scrap sales in the local market have curtailed demand for imported gold, creating a gap between domestic and imported prices.
“The imports were not more than 5 tonne in February, compared with 50-60 tonne in the same period last year. The daily offtake is also less than 10% of last year, at about 50-100 kg in Mumbai,” said Mumbai-based Riddhi Siddhi Bullion director Prithviraj Kothari.
However, he added that scrap sales are high and gold was being purchased for investment. He indicated that prices could touch $1,010 per ounce levels in the international market next week from the current $961 levels.
He said demand was likely to remain low as long as prices are high. In the domestic market, gold is trading at record levels above Rs 12,200 per 10 gram. In the futures market on the MCX, the near month contract traded at a high of Rs 12,291 per 10 gram. However, marginal demand still exists as weddings have driven some purchases by households, which would last till the end of May, say industry players.
The rise in prices was fuelled by the high oil prices, which hit a record of $101 a barrel, and the US dollar, which tumbled against other currencies.
“Gold has performed fairly well during recent times and stuck to its reputation of the best hedge against inflation, especially oil-led. However, it is rising crude oil prices and the declining dollar which pushed gold to record levels.